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What natural gas can do for Maine paper mills and workers

UPM's Madison paper mill
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UPM's Madison paper mill
Posted June 16, 2013, at 9:05 a.m.

It’s not everyday that we get to announce good news for Maine’s manufacturing sector, but, with the Maine Legislature’s recent overwhelming passage of the omnibus energy bill, we can. We both approach this bill with a unique understanding of how important this legislation is for Maine’s economy and for the thousands of families dependent on paper mills and other industrial facilities in communities around the state.

We’ve spent decades in the pulp and paper industry and have seen how energy costs can be the make-or-break factor in a mill’s success. Global competition and the economic recession of the past several years have piled challenges on our state’s factories and mills, from increases in the cost of doing business to major changes in the markets for their products.

Maine needs vital industrial employers as the backbone of our state’s economy. The pulp and paper industry alone provides thousands of jobs around the state and pumps millions of dollars in salaries and local purchasing into Maine communities. In fact, some of the best-paying jobs in the state are at paper mills, and these facilities are usually the lynchpin of the local economy.

It hasn’t only been the recession that has hurt our state’s paper mills. Industrial facilities in Maine are struggling with multiple challenges, and the biggest one is the cost of energy. Everything that happens at a paper mill is dependent on energy.

Unfortunately, mills have to pay a lot more for energy here in Maine than we would if these facilities were in other states. The cost of electricity in Maine is driven by the price of natural gas in New England because gas is usually the cheapest fuel source for the electric generation needed to meet consumer demand. Even though there is plenty of affordable natural gas in the United States, there isn’t enough natural gas coming into the region to give us the supply we need, which drives up the price.

Right now, Maine’s energy costs are $200-million-a-year greater simply because of New England’s lack of access to natural gas — and large facilities are paying far more than we should.

The good news is that the Maine Legislature has recognized this problem and taken action by passing the omnibus energy bill. In his State of the State address, Gov. Paul LePage called out energy costs as a major challenge, and the Legislature has responded with a bill that directly addresses the natural gas supply issues. By directing the Public Utilities Commission to actively support the construction of new gas supply lines into New England, this bill is exactly the solution that our state needs in order to deliver relief to every business and household.

Every mill and every mill employee in Maine has felt the impact of a global economy. With competition around the world that has access to cheap energy, that gets government subsidies and that pays lower wages, Maine mills need all the help they can get to stay competitive. Maine has to level the playing field for industrial facilities, and the quickest and most effective way to do that is by increasing our access to affordable natural gas.

Our mills and communities need access to the affordable natural gas that’s available in the rest of the country. This legislation will make that happen. Not only do all of Maine mills’ out-of-state competitors have access to natural gas at their mills, but they don’t pay the added costs that Maine gas consumers are paying because of the supply issue. The mills need the price advantages that facilities in other states have in order to protect and grow operations here in Maine.

Every day, paper mill managers are focused on keeping Mainers working in the mills and on keeping the pulp and paper industry working for Maine. With this bill, the Legislature has responded to the governor’s call for action to keep our state competitive. We ask everyone to applaud our leaders who have proven that they’re standing with Maine businesses and workers by ensuring that this bill becomes law.

Kenneth Fletcher was a Maine state legislator from 2002-2010 and was the director of the Governor’s Energy Office from 2011-2013. Russ Drechsel is general manager of UPM Madison Paper Business Group.

 

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